Bipartisan Bill Introduced to Require Federal Reserve to Tax Foreign Investment
Sen. Tammy Baldwin, D-Wis., and Sen. Josh Hawley, R-Mo., say an overvalued dollar and other countries' efforts to devalue their currencies created the trade deficit that meant "90,000 factories have closed down, thousands of family farms have gone bankrupt, and millions of manufacturing workers have lost their jobs." The Midwestern senators have introduced a bill, called the Competitive Dollar for Jobs and Prosperity Act, that aims to fix that. They announced the bill -- along with support from Trump allies like the Coalition for a Prosperous America -- on July 31.
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Their bill would require the Federal Reserve to create a mechanism to set the dollar's value at a "trade balancing level," and also gives them a tool to do so -- a "market access charge." This tax on foreign investment -- in stocks, bonds, real estate or other U.S. assets -- should reduce demand for U.S. assets, they believe, and thereby weaken the dollar. The Federal Reserve would be required to set the tax within 180 days, and if it did not do so, the initial rate would be a half of one percent. The Federal Reserve's approach to end the trade deficit would need to aim to balance the current account balance five years after the efforts begin.